Financing inclusive low-carbon resilient development: The role of the Alternative Energy Promotion Centre in Nepal

Several of the world’s poorest and most vulnerable countries are leading the way in developing and implementing low-carbon climate-resilient development (LCRD) strategies. LCRD strategies bring together the two main policy responses to climate change — adaptation and mitigation — to help promote poverty reduction and lead countries towards a pathway of long-term sustainable development.

International and domestic climate finance can play an important role in implementing LCRD policies and plans in the least developed countries. Many of these countries are setting up new financial architecture to help access and deliver climate finance — including new funding institutions, financial intermediaries, instruments and financial planning systems.

This report analyses the new financial delivery structures in Nepal that have been set up to channel LCRD finance to the poor, focusing on the Alternative Energy Promotion Centre and its flagship initiative the National Rural Renewable Energy Programme. Using a political economy analytical approach, this report outlines the incentives shaping LCRD investment in Nepal, and whether these incentives have shaped the design of new financing channels that are effective in delivering inclusive LCRD investment to the poorest and most vulnerable to climate change.